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(Kitco News) - Comex gold prices are modestly higher in early trading Monday, boosted on some short covering and bargain hunting following Friday’s strong selling pressure. Prices overnight did dip to a fresh six-week low. The key outside markets are also in a bullish posture for the precious metals Monday, as the U.S. dollar index is weaker and crude oil prices are firmer. Technically, gold and silver market bulls are now on the ropes and need to show some good power soon. December gold last traded up $2.20 at $1,726.20 an ounce. Spot gold was last quoted up $4.50 at $1,725.50. December Comex silver last traded up $0.098 at $32.195 an ounce.

In overnight news, European stock markets were firmer along with the Euro currency amid Spanish elections that showed the ruling conservative party doing well. Such bolstered notions Spain will be seeking EU financial assistance in the near term. There was some disappointing economic news from Japan that suggests the Bank of Japan will implement fresh monetary stimulus measures soon. Otherwise, it was a quiet start to the new trading week in Asia and Europe. Tensions in the Middle East are ratcheting a bit higher following fresh violence in Lebanon. Focus of the market place this week will be on Monday night’s U.S. presidential debate and on the latest meeting of the U.S. Federal Reserve’s FOMC, which begins Tuesday.

The U.S. dollar index is trading slightly lower Monday morning. The U.S. dollar bears still have the overall near-term technical advantage. Meantime, Nymex crude oil prices are modestly higher early Monday morning. Crude oil bulls and bears are still on a level near-term technical playing field amid choppy trading. These two key “outside markets” will continue to have a significant daily influence on gold and silver prices.

There is no major U.S. economic data due for release Monday.

The London A.M. gold fixing is $1,725.00 versus the previous P.M. fixing of $1,737.00.

Technically, gold futures bears have gained some fresh downside near-term technical momentum recently. Prices overnight hit a fresh six-week low, and on Friday closed at a bearish weekly low close. Prices have been trending lower on the daily bar chart for nearly three weeks. Bulls are fading again and need to show fresh power soon to avoid serious near-term chart damage. The gold bulls’ next upside price breakout objective is to produce a close above solid technical resistance at last week’s high of $1,755.50. Bears’ next near-term downside price objective is closing prices below psychological support at $1,700.00. First resistance is seen at $1,730.00 and then at $1,740.00. First support is seen at the overnight low of $1,714.40 and then at $1,700.00.

December silver futures hit a fresh seven-week low overnight and prices also closed at a technically bearish weekly low close on Friday. Bears are also working on a three-week-old downtrend on the daily bar chart. Silver bulls have faded badly and need to show fresh power soon to avoid serious near-term chart damage. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $33.50 an ounce. The next downside price breakout objective for the bears is closing prices below solid technical support at $31.00. First resistance is seen at $32.50 and then at Friday’s high of $32.915. Next support is seen at $32.00 and then at the overnight low of $31.71.

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